Impact of density bonus amendment uncertain in Encinitas

A recent amendment at the state level to the “density bonus” law requires the preservation of current affordable housing, a hurdle for developers. But it remains to be seen whether the amendment will have much of an impact in Encinitas.

Gov. Jerry Brown signed the updated law, AB 2222, last fall. In turn, the Encinitas City Council, which has tried in the past to discourage developers from invoking density bonus, asked the Planning Department to analyze the amendment.

Many residents have claimed density bonus results in overstuffed developments that kill community character. The California law allows developers to build more housing on a parcel than normally allowed, in exchange for reserving one or more of the units for low-income individuals.

Under AB 2222, a developer must identify and pledge to replace any existing affordable units on a property in order to be eligible for density bonus. This includes low-income units that have been demolished in the five years preceding the application.

However, Planning Director Jeff Murphy said this provision might not readily apply to Encinitas. For one, most of the city’s density bonus projects have been built on former greenhouse sites or vacant land.

Additionally, Murphy said the planning department has interpreted affordable to mean current units that have a covenant or deed restricting them as low-income units.

Many of these deed-restricted units are part of the city’s inclusionary housing ordinance, which requires that one of every 10 homes in a development be sold or rented to those eligible for housing assistance.

Murphy also said affordability won’t be determined on the basis of household salary or prior rental rates.

“With some of these units, you might have high turnover,” Murphy said. “Maybe you had different families living there that paid more than others. It’s then difficult to make that determination.”

Murphy said AB 2222 came about in response to clusters of deed-restricted, low-income units being torn down in other cities to make way for density bonus developments. This resulted in a net loss of affordable housing.

Former Councilwoman Teresa Barth said she would be disappointed if the city only takes deed-restricted properties into account when implementing the amended law.

“If it’s only previously deed restricted, that’s not going to help a lot,” Barth said. “It’s within this new law to protect housing stock currently occupied by low and very low-income households.”

She said density bonus developers scoping sites that aren’t deed restricted should be required to provide rental rates of the current housing occupants. That way, the city can determine whether a property is indeed affordable and needs to be replaced, she said.

In a presentation to the San Diego Housing Federation last October, Barth said one reason density bonus is unpopular is that it sometimes results in a net loss of affordable units.

Barth pointed to an older 11-unit development on Hermes Avenue that once had low-income/moderate rental rates, despite not being deed restricted. However, it was replaced by a density bonus project that included eight market rate homes at triple the rent, with one affordable unit that’s deed restricted.

“Overall, you’re losing affordable housing,” she said.

AB 2222 also requires that affordable units within density bonus projects must be set aside for low-income individuals for 55 years, up from 30 years previously.

Once 55 years pass, the amendment allows low-income units to be resold at market rate, with the city and seller splitting the resale equity value.

On Jan. 30, Councilwoman Lisa Shaffer said she had yet to closely review the Planning Department’s memo.

From an initial reading, Shaffer said she liked that the period of required affordability was extended. But she added allowing low-income units to be resold at market rate runs contrary to the spirit of the law.

Shaffer added that in Encinitas density bonus means large developments that don’t fit the community character, while in other cities the law often complements mixed-use developments around transit stops.

“They use it in a completely different way that actually results in low-income housing,” Shaffer said, adding planners from other cities are “shocked” to hear how it’s implemented in Encinitas.

The council last summer sought to shrink the footprint of density bonus projects with a number of changes to city rules. One was to round down on a calculation to reduce the number of homes in a development.

A lawsuit from the Building Industry Association of San Diego followed in October. It seeks to negate the city’s changes, arguing they unnecessarily hinder developers. The court hearing date hasn’t been set.

AB 2222 took effect Jan. 1. The amendment doesn’t cover density bonus applications submitted or processed prior to that date.